Posts Tagged ‘economics’

Ramdev’s Raring Rallies

November 24, 2011 7 comments

Is Baba Ramdev’s campaign in India’s hinterland – based on a lesser State and greater self-help, striking a chord with Bharat?

A nervous Government's 'crackdown' on Baba Ramdev was revealing.  |  Cartoon by Satish Acharya; source and courtesy -  |   Click for source image.

A nervous Government's 'crackdown' on Baba Ramdev was revealing. | Cartoon by Satish Acharya; source and courtesy - | Click for source image.

Despite the lack of media coverage, Ramdev’s rallies in towns and villages are getting a raring response.  In the last few months, Ramdev visited hundreds of towns and villages, addressing millions of people in these gatherings.

In these Yoga shivirs, he urges people to take their health into their own hands by practicing योग and प्राणायाम. He then extends the argument of self healing and health, to the nation, urging the people to make India healthy by bringing political reform and taking more personal responsibility.

While, his primary campaign is to repatriate Indian wealth stored in foreign countries, there are several other themes to his prescriptions to a healthy India.  Other than the provocative statements that are often taken out of context, the media rarely covers Ramdev’s ideas on “व्यवस्था परिवर्तन” or restructuring polity.

As the government went into contortions, is Baba's campaign in India's hinterlands gathering steam?   |   Cartoon by Shyam Jagota; source and courtesy -   |   Click for source image.

As the government went into contortions, is Baba's campaign in India's hinterlands gathering steam? | Cartoon by Shyam Jagota; source and courtesy - | Click for source image.

Ramdev’s Prescriptions for an Ailing India

Ramdev’s speeches are loaded with data, economic indicators and prescriptions for a new India (for example this speech).  He speaks of the triad of freedom, echoing the ideas presented by the leaders of 1857 as the Triad of Freedom.  He understands that a sound economic policy can strengthen India’s geopolitical position vis-a-vis the western countries (as in this speech).  Some of his important prescriptions, from his various addresses, are summarized below:

  • Remove the monopoly of the English language.  Let Indian languages be allowed for all higher and technical education.
  • Reform monetary policy.   Ramdev wants the RBI to stop promoting and indirectly propping up the dollar and he wants the government from creating policies that encourages Indian savings to flee to tax havens.
  • Restructure tax policy. He wants to radically reduce the tax burden on the population.  Eliminate income, excise and energy taxes.  Streamline other taxation.

During one such rally, Ramdev, rhetorically asked the audience what did India do wrong in the 1950s?  His answer – two large books – that were India’s first and second five year plans.  Ramdev is not a fan of central planning of India’s economy.  Ramdev’s prescriptions  are about reducing governance, which is the foundation of Indic polity.  The emphasis is more freedom less governance.

While the Indian State is promoting increasing dependence; Baba Ramdev is pushing the envelope on self-help   |   Cartoon by Monica Gupta; source and courtesy -  |   Click for source image.

While the Indian State is promoting increasing dependence; Baba Ramdev is pushing the envelope on self-help | Cartoon by Monica Gupta; source and courtesy - | Click for source image.

More Personal Responsibility

For example, Ramdev urges people to follow healthy lifestyles that includes giving up addictive substances.  A child from the audience, asked him the following:

“बीडी सिगरेट गन्दी चीज है तो बिकती क्युं है?” (“if beedi and cigarettes are bad things, then why are they allowed to be sold?”)

One might think that someone who opposes these addictive substances, would answer by saying that the government should “control” these substances, perhaps even ban them.  However, Ramdev’s answer was consistent with his message.  He answered:

“बाजार में जहर भी बिकता है । कोई चीज़ बिकती है तो वह बेचते हैं । हमे क्या करना है? हमे इस गंदी चीजोंसे दूर रहना है ।”
“We also get poison in the market.  When there are people who want to buy  there will be people who will sell it.  But what should we do?  we stay away from all these poisons?”  (watch video here).

Or, in this speech for example, Ramdev says:

“Government थोडी ना अपनी बीमारी ठीक करके देगी” (“Don’t expect the government to take care of your health.”)

More freedom and less governance means that people must take more personal responsibility for themselves.  Expecting too much from the government automatically enlarges the size of the government.  More controls, more mechanisms to check nepotism, corruption and regulation.   In short – a pyramidal polity that expands like a ponzi scheme, and thus leading to the question of “Who will guard the guards?”

For someone who views the west with skepticism, and even mocks western choices in hygiene, Ramdev’s prescriptions are largely rooted in reality of Indic wisdom.

Perhaps the media whose obsession with Western economists and jargon throwing “intellectuals” fail to understand the power in Ramdev’s messages.

Or perhaps they understand it all too well!

Boozed British journalism cant see straight

September 12, 2010 Leave a comment
Why compare Japan with Latam and Zimbabwe? Why not with USA, China and Germany which is more like in Japanese class! (Cartoonist - Clay Bennett,  from Clay Bennett's Editorial Cartoons; courtesy - Click for larger image.

Why compare Japan with Lat-Am and Zimbabwe? Why not with USA, China and Germany which is more like in Japanese class! (Cartoonist - Clay Bennett, from Clay Bennett's Editorial Cartoons; courtesy - Click for larger image.

An Indian problem

Now one of the problems of India, having English as an important language, is the amount of swill, garbage and propaganda that we are subjected to.

In spite of being less than anybody, British media can be pretty biased.

One example was a post by Ian Campbell on Japan’s economic problems. He says,

Japan has … has the worst debt to GDP ratio among major economies … But the interest yield on Japanese government bonds is … not much more than 1 per cent, so the debt is not yet so problematic – and might not seem an obstacle to still more spending. … In just five years, even assuming the economy grows, debt might climb to 230 per cent of GDP …  the hideously large debt would finally drive the fiscal deficit far higher and become intolerable.

Japan’s only route then would be drastic fiscal reform or, more probably, huge resort to the printing press, as Latin America did in the old days and Zimbabwe in more recent times. (via Nokia’s billion-dollar man).

British media needs to talk less about other economies - and look at problems in their own backyard. (Cartoon By Brian Adcock, The Scotland - 1/20/2008 12.00.00 AM Cartoon courtesy -; ©Copyright 2008  Brian Adcock - All Rights Reserved.). Click for larger image

British media needs to talk less about other economies - and look at problems in their own backyard. (Cartoon By Brian Adcock, The Scotland - 1/20/2008 12.00.00 AM Cartoon courtesy -; ©Copyright 2008 Brian Adcock - All Rights Reserved.). Click for larger image

Sad Brits …

Campbell, a British journalist, compares Japan with Latin American and African Governments who have printed a lot of money.

But surely he knows that Western Governments – under the leadership of Ben Bernanke printed much more than Africa and Lat-Am could and did! Why is Campbell not talking of British, European and American printing presses?

Is there a racial smell and smear somewhere? Did I hear him say ‘These irresponsible Blacks, Latinas, Browns, Yellows …’

Japan’s problems

Now Japan’s problems are minor – because they have solid, well run, high tech companies, whose products are in demand all over the world.

Off their peaks, these Japanese firms still have  mean clout in business world. Japanese interest rates being so low will not change Governmental economics by much. So, why compare Japan with Latin America or Zimbabwe?

Of course, you cannot compare Japan to Spain – where prostitution is a national industry.  Or Ireland, or Greece, which have lived on handouts for the last 100 years.

Maybe you should look at British debt my dear sir!

Wishful thinking?

Is it wishful thinking Mr.Campbell? Balanced your judgment is not. Or is it just plain malarkey? Methinks, it is ‘White’ noise!

Ian Campbell, who has “recently returned to the UK, where he is writing a book on rural Mexico.” could utilize his time much better writing about rural Britain, which depends on huge subsidies from a nation groaning under 500% Gross-National-Debt (GND-that is Govt.+Corporate+household).

Now British GND (no hindi puns intended) is a much-more-hideous. Than Japanese at 500%. We both know that British exports  are going nowhere!

Is it not time to focus on Britain itself? Japan will do very well, without your attention. (Cartoonist Jeff Danziger; courtesy -

Cartoon Text - "Austerity? But late squire ... she has been dead these fifty years." 2ndlook says - Is it not time to focus on Britain itself? Japan will do very well, without British attention. (Cartoonist Jeff Danziger; courtesy -

Let us look at British economy

First the biggest sector of British corporate sector is about digging, extracting and selling natural resources.

A historical legacy – with little value-addition. Royal Dutch Shell, BP, North Sea Oil, XStrata, Anglo American, Rio Tinto Group,  BHP Billiton, BG Group, National Grid, Scottish and Southern Energy, Centrica. That is 10 of the top 30 British companies. These companies mostly have their assets abroad – and if push comes to shove, you know these companies will go where their bread is buttered.

The second leg on which British industry stands today is cracked leg of banking and insurance – HSBC, HBOS, RBS, Lloyd’s TSB, Barclays, Standard Chartered, Aviva and Prudential. The British part of the business of these 8 financial firms is in mess. The international business is subsidizing the British business. How long do you think this will last?

The third wobbly leg is pharmaceuticals made up of two companies. Glaxo-Smithkline-and Astra Zeneca. Both are in doldrums due to competition from generic Indian companies – and may look good to beery British journalists boozed in a pub. Now these are the three legs of British economy. We know that three legged stools are always prone to topple over.

That was lesson No.1 for you Campbell.

Is this how British journalism lifts its spirits? (By Paresh Nath, The Khaleej Times, UAE - 5/19/2010 12.00.00 AM)

Is this how British journalism lifts its spirits? (By Paresh Nath, The Khaleej Times, UAE - 5/19/2010 12.00.00 AM)

Lallu has a few things to say here

Lesson No.2 is what our colourful former Railway Minister said, “इस हमाम में सब नंगे हैं” (meaning “everyone in this bathhouse is naked”).

No offense to colour black, but then black pots must not call yellow kettles names.

It is plain bad journalism!

Charge of the lite brigade

The nature of the political beast is the same. Welcome to globalization of ideology. A standardized world. No difference at all!

It has been Post WW2 belief that Economic planning and State intervention will work. (Artist - David Low; (1891-1963) Published - Evening Standard, 26 Jun 1944).

It has been Post WW2 belief that economic planning and State intervention will work. (Artist - David Low; (1891-1963) Published - Evening Standard, 26 Jun 1944).

Low-cal, idea-lite brigade

With a collapsing economic base, changing power equations, their social superiority in tatters, the West has created a corps of propagandists, whose  job it is to create red herrings and  dead-end arguments. These content-lite ideologues, manage to put many ‘victims’ on the defensive.

For the past few quarters, we have seen a rising tide of co-ordinated attacks on China, using right-wing Christian rhetoric, from pit-bulls like Hugh Hendry, Jim Chanos, with the Charlie Rose show chiming in, aided by ‘think-tanks’ like CFR.

A recent column, deals with one such nuisance. A banker-economist-columnist, Abheek Barman writes about Ian Bremmer and his latest ‘theses’ about ‘state capitalism.’

Ian Bremmer, a pundit who analyses global political risks at the Eurasia Group, has recently argued that giant companies, backed by governments, are out to capture free markets. Among others, he identifies China, Russia, Brazil – and India – as candidates that practice ‘state capitalism.’

Western auto industry

Is the French and German auto industry anything but State controlled. With governing boards packed with representatives of the various Landesbanks, union representatives, where does private sector classification come from.

'Confidence of the voter' is always useful and preferred. In case it is absent ... does it matter? (Artist RJ Matson - from Roll Call, Date - 7/21/2010 4.02.01 PM).

'Confidence of the voter' is always useful and preferred. In case it is absent ... does it matter? (Artist RJ Matson - from Roll Call, Date - 7/21/2010 4.02.01 PM).

Are we forgetting how Europe’s largest auto-manufacturer Volkswagen, was set up by State initiative? Or how Renault was saved from the ignominy of ‘Nazi’ collaboration by State initiative? How long would the Agnelli Empire last without State support? Are we not forgetting how Chrysler has been saved several times by US State guarantees – and now GM, too!

Banks on a dole queue

A Swiss survey estimates that the Western banks may need US$1.5 trillion in capital-support. Would Mr.Bremmer like to name the likely source for these funds? French banking is public-sector controlled – which in turn controls French industry. Are we saying that Alsthom, ENI and ANSALDO are private creatures!

In the USA, the heavy-hand of the State was plain and for all to see in the handling of LTCM, WaMU, Bear Sterns, Lehman Brothers. Can anyone forget how Robert Rubin, Hank Paulson, Alan Greenspan all had a distinguished private-sector career (mostly at Goldman Sachs) – before and after their positions in the US Government.

Ian Bremmer frequently faults the ‘sovereign funds’ as a ‘marker’ of the State Capitalism’. Are BofA, Citibank, JP Morgan-Chase, RBS, Barclay’s, Credit Lyonnais, Credit Agricole anything but sovereign funds by another name? Was the Western housing bubble anything but an ‘efficient’ cash-tranfer mechanism? US-Fed printed money and the banks distributed – and the State bailed out the banks. A welfare scheme by another name.

And no! I solemnly declare that there was and is no conflict of interest in all this.

Voter apathy is the real objective behind the mock-fights and pseudo-competition - a facade for collusive power-sharing. (Artist - Jeff Parker, from Florida Today, 7/30/2010, 2.02.01 PM)

Voter apathy is the real objective behind the mock-fights and pseudo-competition - a facade for collusive power-sharing. (Artist - Jeff Parker, from Florida Today, 7/30/2010, 2.02.01 PM)

The incestuous bureaucracy

This kind of co-ordination, without an explicit policy, is possible in a close-knit, group, which has a shared value system, and is accepted by the general population. National bureaucracies have followed similar paths across nations.

What is good for General Motors is good for America. In the USA, Fortune 500 corporations, Wall Street firms, top banks serve as recruiting and training grounds for top bureaucrats. In China and the ex-USSR, the overtly political Communist Party was the training and recruiting ground for bureaucrats.

In most other countries, certain ‘secular’ institutions covertly work as training and recruiting rounds for creating an aligned bureaucracy. Top Japanese and French bureaucrats strangely come from one university. For instance, in Japan from The University of Tokyo, Law Faculty and the French ‘enarques’ cut their teeth at Ecole National d’Administration (ENA). The role of Oxbridge in the British Government cannot be understated.

Making the 'right' noises is 'modern' politics! (Artist - Peter Brookes, Published - The Times, 21 Sep 2002).

Making the 'right' noises is 'modern' politics! (Artist - Peter Brookes, Published - The Times, 21 Sep 2002).

Between 1900 and 1986, 45 per cent of permanent secretaries –or administrative heads of government departments –came from Oxford, 23 per cent from Cambridge.

Like Secretary Hillary Clinton correctly pointed out to business leaders in Pakistan, “we tax everything that moves and doesn’t move, and that’s not what we see happening in Pakistan.” Compared to G7, the share of the State in the BRIC nations would be less than 25% of the national GDP.

The nature of the beast is the same, Mr.Bremer. And this goes for you too, Mr.Barman. The world, these days has become ideologically standardized. Welcome to globalization. No difference at all!

And to think! Ian Bremmer accuses the BRIC countries of practicing ‘state capitalism’. Mr.Bremmer, these arguments are futile. Much like the futile British charge of the Light Brigade in the Crimean War, against the Russians. Like the French general said, it is C’est magnifique, mais ce n’est pas la guerre, c’est de la folie. (It is magnificent, but it is not war, it is folly).

Extract from Ian Bremmer in Foreign Affairs

From The End of the Free Market | The Call.

A generation ago, the collapse of communism made clear that government can’t simply mandate lasting economic growth. To fuel the rising prosperity on which their long-term survival will depend, political leaders in China, Russia, the Arab monarchies of the Persian Gulf and other authoritarian states have accepted that they have to embrace market-based capitalism. But if they leave it entirely to market forces to determine winners and losers, they run the risk of enriching those who will use their new wealth to challenge the state’s power.

Instead, they have embraced state capitalism. Within these countries, political elites use state-owned and politically loyal, privately owned companies to dominate entire economic sectors — like oil, natural gas, aviation, shipping, power generation, arms production, telecommunications, metals, minerals, petrochem­icals, and other industries. They finance all these institutions with the help of increasingly large pools of surplus foreign cash known as sovereign wealth funds.

State capitalism isn’t an ideology. It’s more a set of management principles. It can never match the hold that communism once had on the popular imagination, because it wasn’t born as a response to injustice. It was created to maximize political leverage and state profits, not to right historical wrongs. The system is not the same from one country to another, because the ruling elites in Beijing, Moscow, and Riyadh use it to meet distinctly different sets of needs. And no two state capitalist governments can ever fully align their interests. By its very nature, it’s exclusionary; like mercantilism, it promotes one state at the expense of others. That’s why there can’t really be any kind of “state capitalist consensus.”

Instead, you get client states — mainly smaller Asian countries in China’s shadow and energy exporting governments in Africa and Latin America badly in need of friends with deep pockets. Brazil, India and other big emerging markets that have elements of both free market and state capitalist systems have seats at the G20 table alongside some serious free market skeptics. The developed states don’t have much to offer them at the moment that looks attractive for their economic stability.

Chinese economy’s secret recipe

Fan Gang gives an insider's peek into the Chinese monetary policy.

Fan Gang gives an insider's peek into the Chinese monetary policy.

Economic theory holds that all crises are caused by bubbles or overheating, so if you can manage to prevent bubbles, you can prevent crises. The most important thing for “ironing out cycles” is not the stimulus policy implemented after a crash has already occurred, but to be proactive in boom times and stop bubbles in their early stages.

I am not quite sure whether all Chinese policymakers are good students of modern economics. But it seems that what they had been doing in practice happened to be better than what their counterparts in some other countries were doing—a lot on “deregulation”, but too little on cooling things down when the economy was booming and bubbles were forming.

The problem for the world economy is that everybody remembered Keynes’ lesson about the need for countercyclical policies only when the crisis erupted, after demanding to be left alone—with no symmetric policy intervention—during the preceding boom. But managing the boom is more important, because it addresses what causes crises in the first place. (via Chinese economy’s secret recipe – Views –

Fan Gang, till recently the only academic advisor on monetary policy committee of the People’s Bank of China, gives a rather interesting take – albeit an insider’s view.

China and U.S. soften tone on yuan

The poor will pay a price ... as usual.

The poor will pay a price ... as usual.

Amid harsh rhetoric, Chinese Vice Commerce Minister Zhong Shan and U.S. Treasury Secretary Timothy Geithner sounded some conciliatory notes on Wednesday.Mr. Zhong, making a 30-hour visit to the U.S. to try to ease bilateral tensions, expressed confidence that politicians from the two countries “have the wisdom and ability to resolve existing problems.“Mr. Geithner said he be- lieved China would allow its currency to appreciate over time, according to a CNN interview transcript. While the U.S. “can’t force them to make that change…I think we can work through the tough things we have together,“ Mr. Geithner said.The stakes are high for both sides. The U.S. and China are among each other’s biggest trading partners, and numerous U.S. companies have investments in China. The U.S. is increasingly looking to China to cooperate on international strategic issues, such as nuclear nonproliferation and the fight against terrorism. (via WSJ ON YUAN – China and U.S. soften tone on yuan).

Let the games begin!

Rousing 'macho' WASP voters!

Rousing 'macho' WASP voters!

The Dragon and the Eagle are squaring off! An experienced US stalks China, waiting behind high walls of US$2500 billion foreign exchange reserves.

The US-China game has started in earnest. US, egged on by ‘macho’ voters and a cheering media, will:-

  1. Act tough
  2. Behave in a morally outraged and indignant manner
  3. Commentators will prescribe a trade war and sanctions

In parallel, analysts, academics, think-tanks, journalists will talk-up China. Like Greenspan talking-up the US dollar or Dow Jones. They will: –

  1. Hold up China an nation-exemplar
  2. Write books analysing on China. Such books will start pour out of our ears
  3. Make movies and novels about the ‘dominant’ Chinese in the US
  4. Study, extol Chinese culture /tradition /history, and hold forth as a shining example.

And China will be ‘uncompromising’! Act as though, they have a choice.

A certainty

The change in dollar-yuan exchange ratio will happen. Peacefully, or with violent side shows. Assuming that the dollar-yuan revaluation will happen smoothly, is fraught with risk. That it will happen, without any significant disruption, is one, big, huge, slippery assumption. What will follow the Chinese moment in the sun?

Economic mayhem?

What remains to be seen

What could set off economic mayhem in China? Crime in China (a simmering threat), terrorism in Xinjiang (remote possibility), real estate bubble (a real scenario)?

Will the Chinese Government be able to ride this storm? Without a war with India? Which side of the fence will China fall? Answers to these questions will be worth waiting for! And prepared with!

Last time …

It would do well to remember that last time when China had a problem, it resulted in the India China War of 1962. Just after the disastrous Great Leap Forward and before the equally disastrous Cultural Revolution.

The Great Leap Forward began in 1957-58, saw famine and hunger across China. After the Communist takeover of China, land seized from land owners, was given to peasants in 1949. Ten years later, in 1959, the Chinese State took away the same land from the same peasant. Food shortages, starvation followed. Western (questionable) estimates are that 30 million people died during this period. War with India followed in 1962 – a diversion from the domestic Chinese catastrophe.

What will it be this time?

Where Marx comes alive – Pallavi Aiyar

August 9, 2009 1 comment

For greater good of the most many ...

For greater good of the most many ...

perhaps nothing exemplifies European socialism more than the maze of regulations governing the retail trade in Belgium. It took a panel of five young government officials from the Directorate for Regulation and Organisation of the Market, armed with pages of notes, to explain the main highlights of these to me.

This is what I learnt: In Belgium, shops can only legally go on ‘sale’ twice a year, in January and July. It is only during these periods that shops may sell goods at below cost or ‘extremely reduced’ profit. For six weeks before the sales period, shops may not advertise price reductions.

Although offering discounts (as long as these do not amount to a loss) is legal at other times of the year, for a month before the biannual sales, textiles, shoes and leather products may not be discounted at all. Moreover, the sales are reserved for the ‘seasonal renewal’ of stock, so products deemed non-seasonal may not be included in the sale. Sofas, for example, are considered seasonal but antiques are not.

To implement all of this, two hundred-odd inspectors from the Directorate wander around the country inspecting and many complaints regarding non-compliance are also phoned in.

The rationale behind this mountain of red tape is the protection of small and medium enterprises (SMEs) which it is believed would go bankrupt if big retail were to be allowed to dump in an unrestrained manner. (via Pallavi Aiyar: Where Marx comes alive).

Europe has come a full circle!

The State has slowly and surely, completely taken over. The hard-fought liberties, the Magna Cartas, the Liberté, Egalité, Fraternité, have been in vain. The people have just stepped up to the dias and handed over all the power back to the State. The much touted Renaissance and Reformation have all come to nought.

For the Rest of the World, what is truly a cause of anxiety is that the East seems to be embracing Western political ideology and constructs with reckless enthusiasm – in their quest for ‘progress’ and ‘modernity’. And the public sector behemoths may yet cause some damage.

Remember the East India Company – a public sector company.

Radically rethinking Indian agriculture – Sanjeev Sanyal

July 9, 2009 7 comments

In recent weeks, there have been growing apprehensions that the monsoons of 2009 will fall short of normal. This has again raised fears of rising food prices, collapse in rural incomes and possibly farmer suicides. Many a tear will be shed for rural India. Predictably, there will calls for greater support for the agriculture sector in the form of subsidised fertilisers/pesticides, cheap electricity for pumping ground water and farm loan waivers. We have been doing this now for generations now and our impoverished farmers still commit suicide. Surely, it’s time to rethink this strategy. (via Sanjeev Sanyal: Radically rethinking agriculture).

The Good …

Sanjeev Sanyal’s article does raise some interesting points – and usual points. After a promising start he then loses his way half way through.

He demolishes the idea that “the route to prosperity in rural India lies in accelerating farm production. Agriculture … contributes 16.5 per cent of the economy … great exertion … cannot … (make it) grow much more than 3 per cent per annum on a sustained basis (when the rest of the economy routinely does 7-8 per cent).”

He correctly points out that “India … produces enough food to feed itself but … 20 per cent of output is wasted (a) problem … of distribution and storage, (and with) population growth is now 1.6 per cent per year … we need to grow production by no more than this rate. … we should … slow agricultural growth … if we do not want … greater wastage or a structural price decline …a buffer for drought years … is better management of bumper crops rather than ever more production. India should shift focus from increasing agricultural production to improving its efficiency (with) investment(s) … in storage and distribution.”

His best one is the warning that “farming comes with a large environmental cost … the Green Revolution is anything but “green”. Current farming techniques are severely damaging to the environment through the depletion of ground water, conversion of forest land and over-use of pesticides, fertilisers and other chemicals … sacrificing the long-term viability of the farm sector. It … made sense in the ‘70s to force a level-shift in food-grain production but why should we be still sacrificing the food security of future generations?”

He reminds us that “it makes … sense to strictly conserve ground water and use it only when the monsoons fail. Special attention should be given to water management (as opposed to extraction). Agriculture consumes 80 per cent of the country’s fresh-water in order to produce just 16.5 per cent of GDP … poor use of a scarce resource.”

The Bad …

Do we need this Great American Dream

Do we need this "Great American Dream"

After such good work, he succumbs to the banal – with some usual conclusions. He thinks that,

very large investments in water systems are needed to maintain even the current growth path.

Large investments in water systems are a bad, imported idea. India’s successful water management model is the nearly local 500,000 water bodies – ponds, lakes, anicuts, barrages, bunds, talabs, bawlees, wells. These water bodies stored surface water – and sustained Indian agriculture for the last 2000 years. Post-colonial India’s quest for Nehruvian “temples of modern India” spurred huge and wasteful investment in large hydro-electric dams. Reviving Indian water systems and rivers will take some 10 years and Rs.25,000 crores. About the cost of two large dams.

With around 70 per cent of the population still in the villages, it is absurd to hope that such a small and slow-growing part of the economy can bring salvation to such a large population.

US agricultural subsidies

US agricultural subsidies

Mr.Sanyal, you should consider the following, before you make such a sweeping statement. With the declining power and use of the dollar, the US is fighting a losing battle against agricultural subsidies. The US depends on less than 50,000 corporate ‘farmers’ for 50% of ts production. These corporate ‘farmers’ will abandon agriculture at the first sign of reduced subsidies. Over the next 20-30 years, this leaves India (and Russia) to cater to global food shortfalls. The Western industrial model is in its sunset phase. The Indian agricultural model can be the big winner in the next few decades – under the right stewardship.

And in the meantime, he himself follows up with an observation, “studies by economists like Dipankar Gupta suggest, non-agricultural activity already accounts for around half of rural India’s economy and provides employment to 35-45 per cent of the rural workforce.”

Third, encouraging agricultural growth for exports in not a viable option for India. Export of agricultural products is tantamount to export of water. International trade may make sense for some niche products like tea or for managing natural cycles in food-stocks. However, it cannot be a central strategy for a water-starved country like India. It is especially careless to be thinking about exporting water when climate change may be putting even current supplies at risk.

As pointed out earlier, both water management and agricultural exports is something that is both feasible and sensible thing to do. This is something that India must prepare itself for.

The truly ugly

Meanwhile, policies should be aimed at encouraging the process of moving the rural economy away from agriculture.

Broke ... and Broke

Broke ... and Broke

The Ikshavaku clan, (of Ramchandra in the Ramayana fame), became a ruling family for developing the agricultural strain of sugarcane. Bhagwan Krishna came to be known as Natho, for domesticating wild bulls. Balarama is the 7th avataar of Vishnu – whose ‘weapon’ was the plough – the founder of Indian agricultural practice.

The Indian agriculturist has made a remarkable recovery after the colonial collapse – and he may still surprise you.

The aspirations of rural India have already shifted — the literate children of subsistence farmers want real jobs, not pesticides. Why should we stop them? However, this requires a big shift in policy mindset. For instance, we need to shift from a regime of cheap but irregular power supply (which may work for irrigation) to one that is fully-priced but regular (necessary for the non-farm sector). This is our best bet for making India drought-resistant.

After ceaseless bombardment of advertising, with Indian languages weakening due to massive Government subsidies to English language education, is the movement to urban lifestyle a surprise? Not to me Mr.Sanyal. Though, why you are surprised, Mr.Sanyal is a puzzle to me. We need to invest in rural India. Currently rural credit is way below its contribution to GDP – and the low price realizations for agricultural output makes the case for investments stronger.

Next, we need to revisit general governance in rural India. The traditional structures may have worked for subsistence farming (even this is debatable) but they will not support large investments in industry, construction and services. The government needs to focus on how to deliver policing, enforcement of contracts, property rights and so on.

This is about shifting from a world of farm-loan waivers to one that can support large-scale mobilisation and investment of capital in these areas. The Naxalite movement that affects a fourth of India is not due to the failure of agriculture but the failure of governance. At the same time, note that the cause of property rights and governance is not served by the indiscriminate use of “eminent domain” to acquire large chunks of land for so-called SEZs.

Do we need this American model?

Do we need this American model?

When you refer to ‘traditional structures’, are you talking about ‘general governance’ of the colonial Raj – that post-colonial India continued with? Or are you talking about the pre-Raj structures? The Indian peasant was the first and the only peasant in the world to own his property – till ‘Desert Bloc’ rulers started a 800 year trend of ‘landgrab’. Yes. India does need to re-visit ‘general governance’! We need traditional governance – and not the ‘modern’ colonial baggage, that India has not discarded.

We need to give back the lands that were grabbed from the poor Indian peasant and the poor Indian tribal.

The need is for a framework of governance that allows industry and services to grow organically in response to local conditions.

Finally, there should be a greater effort to provide urban amenities for education, health, shopping and leisure at places that are accessible to the rural hinterland. Together with the shift to non-farm jobs, this provision of amenities will inevitably lead to urbanisation. This is a good thing and should be encouraged. However, urbanisation is not just about migration to the mega-cities of Delhi and Mumbai … mofussil towns need to be revived as social and economic hubs

Indian agriculture has a great future – and don’t you ignore it, Mr.Sanyal. On the other hand, industrial over-production, debt-financed over-consumption, American economic model, funded by petro-dollars /Sino-dollars, is about to end.

India cannot go down that path.

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